That 1.25 percentage points of rate hikes priced in for the next three months alone.
Color me skeptical, but that has been the call of Jim Bianco for a while.
Market Not Setting Rates
If the Fed wants something else, it will walk back expectations.
Recall that 50% was a 90% chance for March. Until a parade of Fed presidents walked it back.
There is no market here. The Fed views communication as its primary tool. The market front runs communication.
Fed Uncertainty Principle and a Big Swift Kick in the Pants
On February 11, Bullard gave the market a kick, then in retrospect Powell didn't like it.
For discussion, please The Fed Uncertainty Principle and a Big Swift Kick in the Pants
Now the Fed has indicated it wants to get to "neutral" by December or next March.
For now, the market agrees.
To bring down inflation, Chicago Fed President Charles Evans said the Fed might have to hike above neutral. Where is that?
For a discussion of "neutral" please see The Fed Searches For the Neutral Interest Rate, Where the Heck Is It?
Stock market carnage will be massive if the Fed gets to 2.75% to 3.25% by December. We would undoubtedly be in a huge recession if that happens.
I suspect a long pause after June, with recession anyway.
This post originated at MishTalk.Com.
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